Americans worry a lot, mostly justifiably

Jobs, housing and health top lists of consumer concerns

WASHINGTON (MarketWatch) — There are big worries, like war and death and human misery.

Then there are the small, but still grating, anxieties: Will another slice of pizza mean too-tight jeans, are cyber-bullies going to target my daughter once she enters school, is it wrong to have our trees sprayed for bugs?

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And then there are areas of concern that you can at least try to prepare for: the loss of your job, your home and maybe even your health. In fact, Americans have been worrying about all sorts of major life issues for years, according Jacob Hacker, an author of a Rockefeller Foundation report released Tuesday, “Standing on Shaky Ground, Americans’ Experiences with Economic Insecurity.”

“There has been a gradual ratcheting up of insecurity. It isn’t like night and day. It’s more like dusk and night,” Hacker said.

Who is on shaky ground? As it turns out, lots of folks. From March 2008 to September 2009, a whopping 93% of households “experienced at least one substantial decline in their wealth or earnings or substantial increase in nondiscretionary spending, most often for medical needs or assistance to family members,” according to the report.

The recession has wreaked havoc on workers’ feelings of security, while worries over medical costs or losing a home have been more stable during the last few years. The Rockefeller report cited data released earlier this year from the Kaiser Family Foundation showing that the percentage of Americans “very” or “somewhat” worried about losing a job was about 50% in the summer of 2007, a rate that climbed to more than 80% two years later, and ticked down to more than 70% in the summer of 2010.

Given the rise in the unemployment rate, which hit 9.8% in November, increasing worries about jobs makes sense. Recent readings on consumer confidence show that there have been some gains, but a persistently weak labor market weighs down these gauges. Read more about consumer confidence.

Earlier this year, the Rockefeller Foundation, a New York-based philanthropy, released a report finding that economic insecurity in 2010 in the U.S. was at its highest point in 25 years. According to that report, almost one in five Americans were estimated to be insecure in 2010, compared with less than one in eight in 1985.

The economically insecure lack an adequate financial safety net, and are those whose available household income fell by at least 25%, after adjusting for inflation, from one year to the next due to a decline in income, and/or an increase in out-of-pocket medical spending. Read more about economic insecurity.

While concerns about jobs have grown in recent years, there may be some surprise that over the same time span, there was little change among those “very” or “somewhat” worried about medical costs. The percentage hovered around 70%.

Meanwhile, the percentage of those worried about losing a home rose from more than 40% in the summer of 2007, to more than 50% in the summer of 2009, to less than 50% in the summer of 2010.

Why were changes smaller for worries about medical costs and housing?

“As much as we’d like to think that the expanding hardship from the great recession was an aberration, these events were being experienced by people prior to the downturn,” Hacker said. “There were already widespread concerns. Economic insecurity didn’t just appear on the horizon in 2008. And there’s no sign that the economic recovery has really translated into less hardship and insecurity in Americans’ lives today.”

Overblown fears

To some extent, some Americans’ fears may be overblown. According to the Tuesday Rockefeller report, when it comes to particularly scary events, people “tend to inflate the chance” of their occurrence.

“About as many Americans worry about losing their partner or spouse as about substantial out-of-pocket medical expenses, and many more do so than are worried about needing to assist family members in financial need,” according to the report. “Yet divorce or death of a spouse or partner is actually far less common than either of these latter sources of nondiscretionary spending.”

There’s also a misperception when it comes to health costs.

“Worries about losing insurance coverage are almost as common as are worries about high out-of-pocket medical spending. Yet losses of insurance coverage actually occur only about half as often as do high out-of-pocket medical costs,” according to the report.

However, when it comes to jobs, Americans have a keen sense for the right level of concern, according to the report: “The frequency of shocks and the proportion of the public worried about these events match relatively closely.”

An area of concern is that many families don’t have very good economic buffers, Hacker said. The “combined impact” of a series of economic shocks can deeply disrupt “the lives of even the most prudent and careful households,” according to the report, “and those households’ expectations for the future can be profoundly unsettled.”

The report continued: “Americans appear extremely vulnerable to future economic shocks, in part because of the wearing down of their basic economic ‘buffers’ against economic risks, such as personal wealth and the potential to borrow from family and friends. Buffers against economic instability are eroded by persisting and clustered economic shocks, depleting the security of even previously prepared economic households.”

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